Sprint Can Survive Without T-Mobile, Ex-CEO Claure Testifies
Sprint Can Survive Without T-Mobile, Ex-CEO Claure Testifies
(Bloomberg) -- Former Sprint Corp. Chief Executive Officer Marcelo Claure testified a merger with T-Mobile US Inc. was not necessary for the company’s survival, contradicting other executives who have appeared as witnesses in the New York antitrust trial that will decide if the deal goes forward.
Attorneys general from a dozen states argue the $26.5 billion merger should be blocked because it will illegally harm competition by erasing one of the four big U.S. wireless companies. The companies say the deal is good for consumers because, among other things, it will save Sprint from its dire financial and competitive outlook.
But Claure, who stepped down as Sprint’s CEO in 2018 and is now executive chairman, didn’t stick with that script Monday when questioned by the judge about T-Mobile CEO John Legere’s testimony last week that Sprint would be “sold for parts” within two years if the merger fails. At least one other witness made a similar prediction, U.S. District Judge Victor Marrero said.
“Those are possibilities,” Claure responded. “I don’t necessarily agree completely.”
Though he said Sprint would survive, Claure said the Overland Park, Kansas-based company faced a bleaker future without the deal and would likely abandon a number markets.
“Sprint two years from now would be a very different from Sprint today, because we would cease to be a national competitor,” Claure said, adding the company would likely have to borrow money and raise prices.
Elinor Hoffmann, a lawyer for New York state, also on Monday presented as evidence a document in which Sprint’s chief commercial officer, Dow Draper, told the California Public Utilities Commission that “Sprint will be here to compete whether we merge with T-Mobile or not.”
Claure was also asked about Sprint’s other options for how to survive with nearly $40 billion in debt. While T-Mobile and Sprint have cited the debt as a major reason why Sprint can’t survive on its own, the states presented email evidence demonstrating that that Sprint’s controlling owner, SoftBank Group Corp., was prepared to pay off Sprint’s debt if necessary.
“If we need to pay back most or all of bonds, I’m willing to pay back all of those,” Masayoshi Son, the Tokyo-based technology conglomerate’s founder and and CEO, said in a Dec. 11, 2017 email to Claure.
Claure was replaced as Sprint CEO by Michel Combes, who also testified on Monday. Combes echoed his predecessor in saying Sprint faced an uncertain future without the deal. He said the company was caught in a “vicious cycle” despite recent improvements in its financial condition and commitments to invest in its network.
Under questioning by the states’ lawyer, Combes said there was a “Plan B” for Sprint in the event the merger with T-Mobile failed to go though. Under that plan, Sprint would focus on fewer markets than it currently does, though its network would still cover about three quarters of the U.S. population.
To contact the reporters on this story: Erik Larson in New York at elarson4@bloomberg.net;Scott Moritz in New York at smoritz6@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Anthony Lin
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